Trump Ally Michelle Bowman Warns: The Fed Is Falling Behind and Must Cut Rates More Aggressively

The debate over U.S. monetary policy is heating up. Michelle Bowman, Federal Reserve governor and a close ally of President Donald Trump, argues that the Fed is reacting too slowly to growing risks in the economy. She insists that interest rates need to be cut faster and more deeply to prevent further damage.

“The Fed is already behind” Speaking at the annual Kentucky Bankers Association convention, Bowman said:

“Now that we have witnessed deteriorating labor market conditions for many months, it is time for the committee to act decisively and proactively.” She stressed that revised employment data point to deeper structural weaknesses that the Fed has so far underestimated. According to Bowman, the central bank risks merely “chasing delays” instead of addressing the problem head-on.

Divisions inside the Fed Her stance sharply contrasts with the more cautious approach of other members. Although the Fed did cut rates by 25 basis points in September — the first reduction in months — Bowman insists this is far from sufficient. As early as the summer, she warned that cuts should have already begun and even called for up to three rate reductions in 2025. Her position is echoed by another Trump appointee, governor Stephen Miran, who has urged a “series of extremely large cuts.” He argued that current rates are overly restrictive and threaten economic growth.

Powell and Goolsbee urge caution Fed Chair Jerome Powell acknowledged that “growing signs of labor market weakness” were the main reason behind the September cut. At the same time, he warned that the central bank must move carefully. Similarly, Chicago Fed President Austan Goolsbee said that after four years of high inflation, it would be dangerous to rush further easing. He noted that the “neutral” rate — the level that neither stimulates nor restrains the economy — is around 3.1%, suggesting a preference for a more gradual pace of cuts.

A new labor market monitoring tool Goolsbee also unveiled a new labor market monitor, which tracks data from 11 sources and can forecast unemployment trends in real time. According to current projections, unemployment should remain at 4.3% in September, still historically low. However, the system highlights slowing hiring and rising risks to employment.

While some Fed officials call for caution, Trump’s allies, led by Bowman and Miran, are pushing for a bold move. The pace and scale of rate cuts will be among the most decisive factors shaping the U.S. economy in the months ahead.

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